Article 38 of the Saudi Bankruptcy Law
المادة 38 من نظام الإفلاس · الفصل الثالث: إجراء التسوية الوقائية: إنهاء الإجراء
When the plan has been fully carried out, the debtor must ask the court to terminate the protective settlement after notifying the creditors, and any interested party may object within 14 days.
Official text (Arabic)
This article has not been amended since the law was issued.
يلتزم المدين عند اكتمال تنفيذ الخطة بتقديم طلب إلى المحكمة للحكم بإنهاء إجراء التسوية الوقائية مرافقاً له المعلومات والوثائق التي تحددها اللائحة، وعليه إبلاغ الدائنين بالطلب قبل تقديمه. ولكل ذي مصلحة حق الاعتراض على هذا الطلب أمام المحكمة خلال (أربعة عشر) يوماً من تقديم المدين للطلب.
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 38 explained in plain English
This article governs the end of the protective settlement procedure when the debtor succeeds in carrying out the plan in full.
The debtor's duties:
- When the plan has been fully carried out, it must submit to the court a request for a ruling to terminate the protective settlement procedure.
- The request is accompanied by the information and documents specified by the Implementing Regulations; the article does not list them but refers to the Implementing Regulations.
- It notifies the creditors of the request before submitting it.
Right to object: Every interested party may object to the termination request before the court within 14 days of the debtor's submission of the request. The period runs from the date the request is submitted, not from the date the creditors are notified. The text does not limit the right to object to creditors but gives it to every interested party.
This provision is linked to Article 39, which makes the debtor's submission of a termination request on completion of the plan the first of the cases for terminating the procedure (paragraph (a)). Article 37 also makes the plan binding on the debtor, the creditors and the owners until its implementation is complete.
If you are a creditor and believe the plan was not carried out as it should have been, it is advisable to consult a lawyer specializing in bankruptcy and commercial cases before the objection period expires.
Practical example
A transport company in Riyadh finished paying everything it committed to in the protective settlement plan. It notified its creditors that it would ask to terminate the procedure, then submitted the request to the court with the required documents. One of the creditors considered that part of its dues had not been paid, so it objected before the court within 14 days of the request being submitted.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
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Frequently asked questions about Article 38 of the Saudi Bankruptcy Law
When does the debtor ask to terminate the protective settlement?
When the plan has been fully carried out, by a request to the court accompanied by the information and documents specified by the Implementing Regulations.
What is the period for objecting to a request to terminate the protective settlement?
14 days from the debtor's submission of the request.
Who may object to the termination request?
Every interested party, before the court.
Must creditors be notified of the termination request?
Yes. The debtor must notify them before submitting the request.
More articles on Protective Settlement
- Article 13
Article 13 allows a debtor at risk of default, defaulting or bankrupt to request the opening of protective settlement, and bars it if it underwent the procedure in the previous twelve months.
1- دون الإخلال بأحكام الأنظمة ذات العلاقة، للمدين التقدم إلى المحكمة بطلب افتتاح إجراء التسوية الوقائية في أي من الحالات الآتية: أ- إذا كان من المرجح أن يعاني م
- Article 14
Article 14 requires the protective settlement request to be accompanied by the proposal, information and documents, and the proposal to include the debtor's financial position and a classification of creditors into classes.
1- يقيد طلب افتتاح إجراء التسوية الوقائية لدى المحكمة بعد تقديمه مرافقاً له المقترح والمعلومات والوثائق ذات العلاقة، وفقاً لما تحدده اللائحة. 2- يجب أن يتضمن ال
- Article 15
Article 15 governs how the court hears a protective settlement application within 40 days, and when it opens the procedure, rejects the application, or adjourns the hearing for up to 21 days.
1- تحدد المحكمة موعداً للنظر في طلب افتتاح إجراء التسوية الوقائية على أن يكون الموعد خلال مدة لا تزيد على (أربعين) يوماً من تاريخ قيد الطلب، وتبلغ المحكمة المدي
- Article 16
Article 16 requires the ruling opening a protective settlement to set a creditors' vote within 40 days, extendable by another 40 days, and requires the debtor to announce the opening within 7 days.
1- تحدد المحكمة في حكمها الصادر بافتتاح إجراء التسوية الوقائية موعداً لتصويت الدائنين على المقترح، على أن يكون الموعد خلال مدة لا تزيد على (أربعين) يوماً من تار
- Article 17
Article 17 allows the debtor to request a stay of claims when applying for a protective settlement, provided it attaches a report from a trustee listed in the register of bankruptcy trustees.
للمدين -عند طلب افتتاح إجراء التسوية الوقائية- أن يطلب من المحكمة تعليق المطالبات، على أن يرفق بطلبه تقريراً معداً من أمين مدرج بقائمة أمناء الإفلاس يتضمن ترجيح
- Article 18
Article 18 sets the stay of claims at no more than 90 days, extendable by 30 days at the debtor's request up to a maximum of 180 days, and explains when the stay ends.
1- دون إخلال بأحكام الفصل (الرابع عشر) من النظام، للمحكمة تعليق المطالبات لمدة لا تزيد على (تسعين) يوماً من تاريخ افتتاح الإجراء، ولها تمديد هذه المدة لـ (ثلاثي
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.